Date:20/07/2006 URL: http://www.thehindubusinessline.com/2006/07/20/stories/2006072000241600.htm

Back Global cereal supplies to tighten: FAO

Our Bureau

Mumbai , July 19

Tighter cereal supplies during 2006-07 are expected to give a renewed upward thrust to international cereal prices that have remained firm since April.

The outlook for lower cereal stocks is also likely to provide support to prices in the new season, Food and Agriculture Organisation (FAO) said in its latest on global crop prospects and food situation.

Global wheat production is projected to decline for the second year in a row in 2006-07 with output projected at 614.9 million tonnes (624.4 mt ).

Utilisation is expected to improve marginally to 627.0 mt (625.3 mt ), while ending stocks would be down 10 mt to 160 mt.

In case of coarse grains, the demand-supply situation is expected to be tighter. With output projected down 12.5 mt to 980mt and consumption seen rising by 2.8 per cent or 28 mt to 1,014 mt, the impact on prices is obvious.

An additional factor for coarse grains is the expanding demand for maize or corn-based ethanol. High energy prices are driving greater utilisation of biofuel. A rebound in feed utilisation will also impact coarse grains.

Higher utilisation would result in lower ending stocks.

Rice is one commodity where the situation is not so tight for the next season. While output is seen rising by 4.3 mt to 425.6 mt, utilisation is estimated to expand marginally to 420.6 mt (418.5 mt). Ending stocks are projected to rise 4 mt to 106 mt. However, lower export availability from major origins has kept rice prices firm in recent months. This trend will continue until September/October when new crop production will be available.